Determining Measurement Methods in Earned Value Management - Revision history

Veronikabanko: /* Annotated Bibliography */

2019-03-04T11:47:50Z

Annotated Bibliography

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	==Annotated Bibliography==		==Annotated Bibliography==
	PMI PMBOK® Guide – Sixth Edition (2017)		*'''PMI PMBOK® Guide – Sixth Edition (2017)'''
	The PMI standard for project management introduces the ~~practice of~~ earned value management in general (pp., but lacks the detailed description of the		The PMI standard for project management introduces the earned value management in general (pp.105.), but lacks the detailed description of the practice. It contains information about the importance and benefits of earned value analysis (therefore it is useful to get an overview of the practice), but in order to implement it into real practice further examination is required.
	PMI Practice Standard for Earned Value Management – Second Edition (2011)		*'''PMI Practice Standard for Earned Value Management – Second Edition (2011)'''
	Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition.		This practice standard for earned value management aims to give the previously desired examination, namely the detailed description of the practice with all of its topics and steps. Besides it gives a more accurate introduction to the process (Chapter 1, pp.5-12.), it also places the topic of the article into the various steps of EVM (Chapter 7, pp.35-43.). Furthermore, it defines the inputs and output of the measurement process, the explanation of the different methods with illustrations for a better understanding, and then ends with recommendations of the usage of the methods.
			*'''Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition.'''
			This book is for the same purpose than the previous standard, which is the description of earned value management but in even more details. In chapter 9 (pp.85-108.), more methods used to plan and measure earned value are discussed along with examples. It also provides information about Control Account Plans that helps to get an overview of the methods and their usage in the real world.

	==References==		==References==
	<references />		<references />

Veronikabanko: /* Annotated Bibliography */

2019-03-04T11:06:21Z

Annotated Bibliography

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	==Annotated Bibliography==		==Annotated Bibliography==
	~~undone yet~~		PMI PMBOK® Guide – Sixth Edition (2017)
			The PMI standard for project management introduces the practice of earned value management in general (pp., but lacks the detailed description of the
			PMI Practice Standard for Earned Value Management – Second Edition (2011)
			Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition.

	==References==		==References==
	<references />		<references />

Veronikabanko: /* Milestones with Weighted Values */

2019-03-04T10:42:12Z

Milestones with Weighted Values

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	According to the relationships: A gets 40%, B gets 50%, while C gets 10%, which means that B is the most important milestone through the work package following with A and then C.		According to the relationships: A gets 40%, B gets 50%, while C gets 10%, which means that B is the most important milestone through the work package following with A and then C.

	Furthermore, ~~our~~ total budget value (=budget at completition (BAC)) is 400.000 DKK, so the planned values (PV) can be calculated as:		Furthermore, the total budget value (=budget at completition (BAC)) is 400.000 DKK, so the planned values (PV) can be calculated as:
	: ''PV<sub>A</sub> = BAC * %<sub>A</sub> / 100 = 400.000 * 40 / 100 = 160.000 [DKK]		: ''PV<sub>A</sub> = BAC * %<sub>A</sub> / 100 = 400.000 * 40 / 100 = 160.000 [DKK]
	: ''PV<sub>B</sub> = BAC * %<sub>B</sub> / 100 = 400.000 * 50 / 100 = 200.000 [DKK]		: ''PV<sub>B</sub> = BAC * %<sub>B</sub> / 100 = 400.000 * 50 / 100 = 200.000 [DKK]

Veronikabanko: /* Fixed Formula */

2019-03-04T10:35:58Z

Fixed Formula

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	[[File:FixedFormula.png\|400px\|thumb\|right\|'''Figure 3''': Fixed Formula Method example. inspired by PMI Practice Standard for EVM <ref name="PMIEVM"/>]]		[[File:FixedFormula.png\|400px\|thumb\|right\|'''Figure 3''': Fixed Formula Method example. inspired by PMI Practice Standard for EVM <ref name="PMIEVM"/>]]

	In order to provide a better understanding, a short example is demonstrated (see '''Figure 3'''). Let’s suppose that ~~our~~ project is the manufacturing of a table, and the 25/75 fixed formula method is used to track the performance of the manufacturing project. First of all, we order the necessary materials for the table. When the wood has been ordered we already have the 25% of the planned value in the beginning of the project. The rest part of the work package, the other 75% will be the arrival of materials, the grinding, roughing, surface finishing, assembly of the desk and so on, but this 75% will only be assigned to the project at that point when the work package has been done.		In order to provide a better understanding, a short example is demonstrated (see '''Figure 3'''). Let’s suppose that one's project is the manufacturing of a table, and the 25/75 fixed formula method is used to track the performance of the manufacturing project. First of all, they order the necessary materials for the table. When the wood has been ordered they already have the 25% of the planned value in the beginning of the project. The rest part of the work package, the other 75% will be the arrival of materials, the grinding, roughing, surface finishing, assembly of the desk and so on, but this 75% will only be assigned to the project at that point when the work package has been done.

	It drives us to a question that is, what happens if the project manager creates a snapshot of the overall project (containing lots of other work packages) when the progress of this work package is 40% (green line in '''Figure 3'''), and ~~he/she~~ would like to calculate the current EV for the snapshot? Since we haven't reached 100% of completion, ~~he/she~~ can only say that this project has 25% earned value, therefore the calculation will be inaccurate.		It drives one to a question that is, what happens if the project manager creates a snapshot of the overall project (containing lots of other work packages) when the progress of this work package is 40% (green line in '''Figure 3'''), and would like to calculate the current EV for the snapshot? Since they haven't reached 100% of completion, the manager can only say that this project has 25% earned value, therefore the calculation will be inaccurate.

	This is the reason why this method is recommended to be used for short-term work packages that are scheduled to start and completed in the same one or at the maximum of two measurement periods. The length of one period does not matter remarkably, it can be a week or a month as well.		This is the reason why this method is recommended to be used for short-term work packages that are scheduled to start and completed in the same one or at the maximum of two measurement periods. The length of one period does not matter remarkably, it can be a week or a month as well.

Veronikabanko: /* Introduction to EVM */

2019-03-04T10:29:01Z

Introduction to EVM

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	In project management, one of the most important sessions is the process of monitoring and controlling projects. The project manager is responsible for tracking the project's progress and performance with the help of predefined methods in terms of time and costs spent, and to analyze the value of work performed, in order to find out whether the current state of the project corresponds to the original project management plan. The main benefit of this task is, besides the accomplished insight into the health of the project, the ability to make corrective and preventive steps towards the successful completion of the project. <ref name="PMIEVM"> ''PMI Practice Standard for Earned Value Management – Second Edition (2011)., Available at: https://www.pmi.org/pmbok-guide-standards/framework/earned-value-management-2nd '' </ref>		In project management, one of the most important sessions is the process of monitoring and controlling projects. The project manager is responsible for tracking the project's progress and performance with the help of predefined methods in terms of time and costs spent, and to analyze the value of work performed, in order to find out whether the current state of the project corresponds to the original project management plan. The main benefit of this task is, besides the accomplished insight into the health of the project, the ability to make corrective and preventive steps towards the successful completion of the project. <ref name="PMIEVM"> ''PMI Practice Standard for Earned Value Management – Second Edition (2011)., Available at: https://www.pmi.org/pmbok-guide-standards/framework/earned-value-management-2nd '' </ref>

	EVM is one amongst the many types of techniques which can be used to perform these activities. EVM analysis with the usage of the predefined work scope, timeframe for performance of the work, resources and costs, etc. as inputs can be resulted in the so called “earned value”.<ref name="PMIEVM"/> Earned value (EV) is the variable that shows us the value of the work performed in a specific point of the time. It is then compared with the planned value (PV), that represents the initially planned schedule position, and the actual spent resources in order to show the current cost position.<ref name="Fleming"> ''Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition. Newtown Square, Pa.: Project Management Institute, Inc.'' </ref> The conclusion regarding the actual status of the project can be acquired after the comparison, which is a useful output for the management in order to determine the essential further modifications, such as corrective action plans. Furthermore, the forecast of expected project costs can be initially created and then updated. <ref name="PMIEVM"/> To be able to measure the performance through the project’s duration, specific measurement points are needed. These dedicated control points are included in the Control Account Plan (CAP).		EVM is one amongst the many types of techniques which can be used to perform these activities. EVM analysis with the usage of the predefined work scope, timeframe for performance of the work, resources and costs, etc. as inputs can be resulted in the so called “earned value”.<ref name="PMIEVM"/> Earned value (EV) is the variable that shows the value of the work performed in a specific point of the time. It is then compared with the planned value (PV), that represents the initially planned schedule position, and the actual spent resources in order to show the current cost position.<ref name="Fleming"> ''Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition. Newtown Square, Pa.: Project Management Institute, Inc.'' </ref> The conclusion regarding the actual status of the project can be acquired after the comparison, which is a useful output for the management in order to determine the essential further modifications, such as corrective action plans. Furthermore, the forecast of expected project costs can be initially created and then updated. <ref name="PMIEVM"/> To be able to measure the performance through the project’s duration, specific measurement points are needed. These dedicated control points are included in the Control Account Plan (CAP).

	==Control Account Plan (CAP)==		==Control Account Plan (CAP)==

Veronikabanko: /* Measurement Methods */

2019-03-04T10:16:04Z

Measurement Methods

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	Although, there are several classes of work, i.e. the discrete effort, the apportioned effort and the level of effort which can be measured differently, this article only provides an insight into the measurement of the discrete effort class of work (the other methods can be found here: <ref name="PMIEVM"/>)		Although, there are several classes of work, i.e. the discrete effort, the apportioned effort and the level of effort which can be measured differently, this article only provides an insight into the measurement of the discrete effort class of work (the other methods can be found here: <ref name="PMIEVM"/>)

	According to the PMI Earned Value Management Standard <ref name="PMIEVM"/>, discrete effort is an activity which can be planned and is convenient to measure because ''~~„is~~ directly related to specific end products or services with distinct and measurable ~~points”~~''. Several measurement methods are used to measure discrete effort, such as the Fixed Formula, the Milestones with Weighted Values, the Percent Complete Estimates, the Physical Measurement, the Equivalent completed units, the Earned Standards and so on. The type and actual phase of the project, the nature of the work package, and other circumstances determine the method to be used to best address the measurement process. In the following sections some methods are described in details and supplied with its advantages and disadvantages. Moreover, examples for each method are shown for a better understanding.		According to the PMI Earned Value Management Standard <ref name="PMIEVM"/>, discrete effort is an activity which can be planned and is convenient to measure because ''"is directly related to specific end products or services with distinct and measurable points"''. Several measurement methods are used to measure discrete effort, such as the Fixed Formula, the Milestones with Weighted Values, the Percent Complete Estimates, the Physical Measurement, the Equivalent completed units, the Earned Standards and so on. The type and actual phase of the project, the nature of the work package, and other circumstances determine the method to be used to best address the measurement process. In the following sections some methods are described in details and supplied with its advantages and disadvantages. Moreover, examples for each method are shown for a better understanding.

	===Milestones with Weighted Values===		===Milestones with Weighted Values===

Veronikabanko: /* Control Account Plan (CAP) */

2019-03-04T10:15:25Z

Control Account Plan (CAP)

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	==Control Account Plan (CAP)==		==Control Account Plan (CAP)==
	According to Fleming et al. (2010) <ref name="Fleming"/>, Control Account Plan is ''~~„the~~ fundamental building block which forms the project’s measurement ~~baseline”~~.'' It contains all the planned information which is needed in order to perform the monitoring process, that is to say the measurement of the actual status of work throughout the project. The necessary informations are, as listed by Fleming et al. (2010) <ref name="Fleming"/>:		According to Fleming et al. (2010) <ref name="Fleming"/>, Control Account Plan is ''"the fundamental building block which forms the project’s measurement baseline".'' It contains all the planned information which is needed in order to perform the monitoring process, that is to say the measurement of the actual status of work throughout the project. The necessary informations are, as listed by Fleming et al. (2010) <ref name="Fleming"/>:
	* Statement of work: brief scope description		* Statement of work: brief scope description
	* Schedule: start and stop dates for each task		* Schedule: start and stop dates for each task

Veronikabanko at 19:33, 26 February 2019

2019-02-26T19:33:34Z

Veronikabanko: /* Limitations */

2019-02-26T16:37:54Z

Limitations

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	* risk,		* risk,
	* level of accuracy to measure (performance, schedule, cost).		* level of accuracy to measure (performance, schedule, cost).
	If any of the previously mentioned aspect are missing, misunderstood, or miscalculated false outputs could rise through the process of measurement. Furthermore, according to Fleming et al. <ref name="Fleming"/>, ''~~„an~~ incorrect choice of a performance measurement method can result in inaccurate status, and subsequently result in incorrect or ineffective management ~~action”~~.''		If any of the previously mentioned aspect are missing, misunderstood, or miscalculated false outputs could rise through the process of measurement. Furthermore, according to Fleming et al. <ref name="Fleming"/>, ''"an incorrect choice of a performance measurement method can result in inaccurate status, and subsequently result in incorrect or ineffective management action".''

	==Annotated Bibliography==		==Annotated Bibliography==

Veronikabanko at 11:37, 24 February 2019

2019-02-24T11:37:27Z

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	==References==		==References==
	<references />		<references />

	~~==Table of Figures==~~

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	Guidelines are provided in the end of the article, with which the ability to choose the best suited measurement technique for a particular project is given.		Guidelines are provided in the end of the article, with which the ability to choose the best suited measurement technique for a particular project is given.

	==Introduction to ~~Earned Value Management~~==		==Introduction to EVM==
	In project management, one of the most important sessions is the process of monitoring and controlling projects. The project manager is responsible for tracking the project's progress and performance with the help of predefined methods in terms of time and costs spent, and to analyze the value of work performed, in order to find out whether the current state of the project corresponds to the original project management plan. The main benefit of this task is, besides the accomplished insight into the health of the project, the ability to make corrective and preventive steps towards the successful completion of the project. <ref name="PMIEVM"> ''PMI Practice Standard for Earned Value Management – Second Edition (2011)., Available at: https://www.pmi.org/pmbok-guide-standards/framework/earned-value-management-2nd '' </ref>		In project management, one of the most important sessions is the process of monitoring and controlling projects. The project manager is responsible for tracking the project's progress and performance with the help of predefined methods in terms of time and costs spent, and to analyze the value of work performed, in order to find out whether the current state of the project corresponds to the original project management plan. The main benefit of this task is, besides the accomplished insight into the health of the project, the ability to make corrective and preventive steps towards the successful completion of the project. <ref name="PMIEVM"> ''PMI Practice Standard for Earned Value Management – Second Edition (2011)., Available at: https://www.pmi.org/pmbok-guide-standards/framework/earned-value-management-2nd '' </ref>

	~~Earned Value Management (~~EVM) is one amongst the many types of techniques which can be used to perform these activities. EVM analysis with the usage of the predefined work scope, timeframe for performance of the work, resources and costs, etc. as inputs can be resulted in the so called “earned value”.<ref name="PMIEVM"/> Earned value (EV) is the variable that shows us the value of the work performed in a specific point of the time. It is then compared with the planned value (PV), that represents the initially planned schedule position, and the actual spent resources in order to show the current cost position.<ref name="Fleming"> ''Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition. Newtown Square, Pa.: Project Management Institute, Inc.'' </ref> The conclusion regarding the actual status of the project can be acquired after the comparison, which is a useful output for the management in order to determine the essential further modifications, such as corrective action plans. Furthermore, the forecast of expected project costs can be initially created and then updated. <ref name="PMIEVM"/> To be able to measure the performance through the project’s duration, specific measurement points are needed. These dedicated control points are included in the Control Account Plan (CAP).		EVM is one amongst the many types of techniques which can be used to perform these activities. EVM analysis with the usage of the predefined work scope, timeframe for performance of the work, resources and costs, etc. as inputs can be resulted in the so called “earned value”.<ref name="PMIEVM"/> Earned value (EV) is the variable that shows us the value of the work performed in a specific point of the time. It is then compared with the planned value (PV), that represents the initially planned schedule position, and the actual spent resources in order to show the current cost position.<ref name="Fleming"> ''Fleming, Q. and Koppelman, J. (2010). Earned value project management - Fourth Edition. Newtown Square, Pa.: Project Management Institute, Inc.'' </ref> The conclusion regarding the actual status of the project can be acquired after the comparison, which is a useful output for the management in order to determine the essential further modifications, such as corrective action plans. Furthermore, the forecast of expected project costs can be initially created and then updated. <ref name="PMIEVM"/> To be able to measure the performance through the project’s duration, specific measurement points are needed. These dedicated control points are included in the Control Account Plan (CAP).

	==Control Account Plan (CAP)==		==Control Account Plan (CAP)==
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	* Type of effort		* Type of effort
	* Division into discrete work packages		* Division into discrete work packages
	* Method used to measure earned value ~~(EV)~~ performance		* Method used to measure earned value performance

	The CAP is created before the progress of determination of measurement methods, because apart this all of the above elements are necessary inputs of the determination process, described in the following section.		The CAP is created before the progress of determination of measurement methods, because apart this all of the above elements are necessary inputs of the determination process, described in the following section.
	[[File:CAP.png\|670px\|thumb\|centre\|'''Figure 1''': Control Account Plan. inspired by Fleming et al. <ref name="Fleming"/>]]		[[File:CAP.png\|670px\|thumb\|centre\|'''Figure 1''': Control Account Plan. inspired by Fleming et al. <ref name="Fleming"/>]]
	As can be seen in '''Figure 1''', a CAP consists of work packages, to which different EV ~~methods, in other words earned value~~ measurement methods, are assigned. Throughout the predefined timescale (in this example: 3 months), dedicated planned value control points are stated (example: one per month, but it could also be one per week). When the measurement takes place, the calculated earned value is compared with these points. It can also be acknowledged that each work package has different measurement methods assigned which raises some questions:		As can be seen in '''Figure 1''', a CAP consists of work packages, to which different EV measurement methods are assigned. Throughout the predefined timescale (in this example: 3 months), dedicated planned value control points are stated (example: one per month, but it could also be one per week). When the measurement takes place, the calculated earned value is compared with these points. It can also be acknowledged that each work package has different measurement methods assigned which raises some questions:
	* What is the difference between these methods?		* What is the difference between these methods?
	* How is one method assigned to a specific work package?		* How is one method assigned to a specific work package?
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	==Limitations==		==Limitations==
	~~Earned Value Management~~ is considered as an immense and exhaustive theory in the field of project management from which a relatively small part is the determination of performance measurement methods. Therefore, to truly understand and implement it into practice, a thorough knowledge is crucial. On top of that, the discussed part is meant to be in context, so it is connected with other previous and following steps. Hence it is not applicable to any project by itself because the creation of required inputs, the accurate usage of methods and the employment of outputs are not examined within the article.		EVM is considered as an immense and exhaustive theory in the field of project management from which a relatively small part is the determination of performance measurement methods. Therefore, to truly understand and implement it into practice, a thorough knowledge is crucial. On top of that, the discussed part is meant to be in context, so it is connected with other previous and following steps. Hence it is not applicable to any project by itself because the creation of required inputs, the accurate usage of methods and the employment of outputs are not examined within the article.
	In addition, to select the proper method for every work package, various aspects are needed to be taken into consideration <ref name="PMIEVM"/>:		In addition, to select the proper method for every work package, various aspects are needed to be taken into consideration <ref name="PMIEVM"/>:
	* the duration and measurability of work,		* the duration and measurability of work,